Wednesday, April 25, 2007

Recently unretired (?) Battle of Alberta blogger Andy Grabia is sinking his teeth into the issue of the proposed new rink for the Edmonton Oilers and the resultant media coverage, and the results have been interesting.

According to Lamphier, a new arena will also get rid of the "small army of panhandlers or even crack dealers" in the downtown area. He's totally right, of course. They won't stay because of the increase in traffic and public transportation, like on Whyte Avenue. No, no. They'll flee to West Edmonton Mall and St. Albert, and bug those people. Plus, why do something crazy like invest money in solutions to poverty or drug addiction when you can spend over $400 million throwing up a hockey rink for millionaires, and then just chase those disgusting poor people away? That's a much more ethical solution, if you ask me.

I don't honestly think there's one, blanket statement that can sum up my general feelings on publicly funded arenas, but one thing's for sure: Debate on the issue is never a bad thing.

Besides, for all of the genuine discussion of the need for new rinks in places like Pittsburgh and Long Island, the only voices we've consistently heard calling for brand-new digs in Oil-town have come from the ownership group itself.

That in itself deserves a raised eyebrow or two, even if (for now) we keep our pitchforks at bay..

7 Comments:

I always get a kick out of the circular logic employed by the boosters of taxpayer funded arenas. Arenas cure urban blight, they claim, so let's build a new one because the area around the old one is blighted right now.

With the Alberta economy humming along, the Oilers should have no problem getting private financing for a new arena. All of the new arenas in Canada over the last ten years or so have been built privately, and they are all profitable. Even Ottawa's arena, which many thought would be a white elephant due to its far flung suburban location, is making money for Eugene Melnyk.

They'll be in for a fight, though, if they try to use taxpayer dollars for it. If I'm an Albertan waiting for government to fix up aging urban infrastructure that is all around us, I'd be awfully choked to see the city and the province pony up for a brand new arena. You also have to keep in mind that the Alberta government will have to pay twice, because Calgary and Edmonton are like squabbling siblings -- what one gets, the other has to get also.

You also have to keep in mind that the Alberta government will have to pay twice, because Calgary and Edmonton are like squabbling siblings -- what one gets, the other has to get also.

And that's arguably the most galling thing. Because what the hell is wrong with the Saddledome? The fact that it was built before the arena boom began around 1995? Only thing I can come up with, and it's not like I go there -- tonight will be something like the 35th Hitmen game I've gone to this year.

Rexall is crumbling, it is an outdated arena. Edmonton, my city is growing by leaps and bounds. Now is the time to invest in a new arena. I am a taxpayer and i use this facility for oilers games, concerts and other events.

A New building could be full 300+ nights a year, while rexall is passed over by major promoters because it is too small and outdated.

Rexall needs $250MM in renovations, while for an additional $150MM you can have something new downtown where it can have a net economic benefit. The city is growing, now is the time to swallow this one and build an important piece of infrastructure.

Hey, what's an extra $150 million? Those roads and sewers can wait another few years, can't they?

I think the NHL lockout was perhaps the best example of how the whole economic impact of sports is grossly overstated. Even right in the downtown core of Vancouver, restaurant business stayed the same, and not one place closed despite the alleged great benefits of NHL hockey on the local economy. I can remember the media interviewing the head of BC Restaurant Association in the middle of the lockout, hoping for a story of doom and gloom, and they were met with a shrug of the shoulders. Trust me, if this guy's members had been impacted by the lockout, he would have heard about it. They weren't, and he didn't. It's pretty clear that any game day restaurant spending simply got redirected to different restaurants on different days.

The same holds true in other sports. Having the Super Bowl in Detroit was supposed to be an economic salvation, yet the State of Michigan only showed a 2% gain in sales tax receipts in the Super Bowl period as opposed to the previous non-Super Bowl year, and hotel tax revenue was only up marginally. This extra revenue, such as it was, probably didn't even pay for the extra policing and security. Other cities have had similar Super Bowl experiences.

I worked in downtown Vancouver during the APEC Conference, and saw the displacement effect. Downtown restaurants that were expecting a business boom were actually empty, as locals stayed away and visiting delegates ate catered meals in the hotels. Economic moral of the story -- big events can displace as much business as they create, a cautionary tale as 2010 approaches.

If the City of Edmonton and the Province of Alberta want to create meaningful economic growth with that $400 million, they will spend it on transportation and upgrading urban infrastructure, and leave the lending for new commercial buildings to the banks.

Rexall needs $250MM in renovations, while for an additional $150MM you can have something new downtown where it can have a net economic benefit. The city is growing, now is the time to swallow this one and build an important piece of infrastructure.

Every single economist not employed by the owners who studies this issue comes to the conclusion that a new arena does not add enough economic activity to even make the price to the taxpayer break even. There are several things that work against it.

The first as that almost all of the economic activity around the new arena isn't created; it's transferred. People tend to have a fixed entertainment budget, and if they weren't spending it on hockey tickets and the associated purchases both inside and outside the arena, they'd simply be spending it somewhere else in the local area.

The revenues generated by a new arena have a very small multiplier effect. They do not lead to much additional economic activity. There are many other ways the same money (or much less money) that would have a significantly greater impact. Here in Minnesota, the legislature is simultaneously, but not linked, subsidizing a football stadium to the tune of $400+ million, or offering $9 million in subsidies to West publishing. The latter, despite being an expenditure of only about 2% of the former, would have a much greater economic impact.

In fact, the tax jurisdiction that provides the subsidy actually tends to lose revenue from a stadium project. Not only are they extremely expensive in up front costs, many of the subsidies involve using any of the additional tax revenues generated in the arena to pay off the debt of building it. were these dollars spent on some other form of entertainment that did not receive such a subsidy, the tax jurisdiction would receive them in the general fund.

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About Me

A sportswriter at The Globe and Mail, James covers the NHL and the game of hockey. He is a member of the Professional Hockey Writers' Association, a radio and TV analyst with TSN and was the NHL network manager at SB Nation from 2008 to 2010. A graduate of Thompson Rivers and Ryerson universities, James grew up in Kamloops, B.C. — one of Canada's great hockey cities — and was a season ticket holder in the Blazers' glory years.

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